SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

Bausch Health’s Long-Term Incentive Plan

In May 2014, shareholders approved Bausch Health’s 2014 Omnibus Incentive Plan (the “2014 Plan”) which replaced Bausch Health’s 2011 Omnibus Incentive Plan (the “2011 Plan”) for future equity awards granted by the Company. The Company transferred the common shares available under the 2011 Plan to the 2014 Plan. The maximum number of common shares that may be issued to participants under the 2014 Plan was initially 18,000,000 common shares, plus the number of common shares under the 2011 Plan reserved but unissued and not underlying outstanding awards and the number of common shares becoming available for reuse after awards are terminated, forfeited, cancelled, exchanged or surrendered under the 2011 Plan and the Company’s 2007 Equity Compensation Plan. The 2014 Plan was amended and restated effective April 30, 2018, April 28, 2020, June 21, 2022 and May 16, 2023 to, among other things, increase the number of common shares authorized for issuance under the 2014 Plan.

Effective May 14, 2024, Bausch Health further amended and restated the 2014 Plan, as subsequently amended and restated (the “Amended and Restated 2014 Plan”). Such amendment and restatement increased the number of common shares authorized for issuance under the Amended and Restated 2014 Plan by an additional 20,000,000 common shares.

Approximately 33,170,000 common shares were available for future grants as of December 31, 2024. The Company uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

Bausch Health has a long-term incentive program with the objective of aligning the share-based awards granted to senior management with the Company’s focus on generating operating cash flow while maintaining focus on improving total shareholder return (“TSR”) over the long-term. The share-based awards granted under this long-term incentive program consist of time-based stock options, time-based RSUs and performance-based RSUs. Performance-based RSUs are

comprised of awards that vest upon the attainment of certain targets that are based on the Company’s adjusted operating cash flow (“Adjusted Operating Cash Flow”) with a TSR modifier.

The following table summarizes the components and classification of the Company’s share-based compensation expense related to stock options and RSUs for the years 2024, 2023 and 2022:


(in millions)	2024		2023		2022
Stock options	$	13	$	17	$	15
RSUs	137		115		111
Share-based compensation expense	$	150	$	132	$	126

Research and development expenses	$	11	$	11	$	12
Selling, general and administrative expenses	139		121		114
Share-based compensation expense	$	150	$	132	$	126

Stock Options

Stock options granted under the 2011 Plan and the Amended and Restated 2014 Plan generally expire on tenth anniversary of the grant date. The exercise price of any stock option granted under the 2011 Plan and the Amended and Restated 2014 Plan will not be less than the closing price per common share on the date of grant. Stock options generally vest 33% and 25% each year over a three-year and four-year period, respectively, on the anniversary of the date of grant.

There were no stock options granted in 2024. The fair values of all stock options granted for the years 2023 and 2022 were estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	2024	2023		2022
Expected stock option life (years)	N/A	3.0		3.0
Expected volatility	N/A	76.1	%	37.8	%
Risk-free interest rate	N/A	4.8	%	1.8	%
Expected dividend yield	N/A	—	%	—	%

The expected stock option life was determined based on historical exercise and forfeiture patterns. The expected volatility was determined based on implied volatility in the market traded options of the Company’s common stock. The risk-free interest rate was determined based on the rate at the time of grant for zero-coupon U.S. government bonds with maturity dates equal to the expected life of the stock option. The expected dividend yield was determined based on the stock option’s exercise price and expected annual dividend rate at the time of grant.

The Black-Scholes option-pricing model used by the Company to calculate stock option values was developed to estimate the fair value of freely tradeable, fully transferable stock options without vesting restrictions, which significantly differ from the Company’s stock option awards. This model also requires highly subjective assumptions, including future stock price volatility and expected time until exercise, which greatly affect the calculated values.

The following table summarizes stock option activity during 2024:


(in millions, except per share amounts)	Options	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding, January 1, 2024	10.7	$	23.52
Granted	—	$	—
Exercised	—	$	—
Expired or forfeited	(2.6)	$	25.28
Outstanding, December 31, 2024	8.1	$	22.96	3.8	$	—
Vested and expected to vest, December 31, 2024	7.9	$	23.07	3.8	$	—
Vested and exercisable, December 31, 2024	7.0	$	23.75	3.3	$	—

The weighted-average fair values of all stock options granted in 2024, 2023 and 2022 were $0, $4.87 and $6.60, respectively. The total intrinsic values of stock options exercised in 2024, 2023 and 2022 were $0, $0 and $1 million, respectively. Proceeds received on the exercise of stock options in 2024, 2023 and 2022 were $0, $0 and $3 million, respectively.

As of December 31, 2024, the total remaining unrecognized compensation expense related to non-vested stock options amounted to $1 million, which will be amortized over the weighted-average remaining requisite service period of approximately 0.9 years.

RSUs

RSUs generally vest 33% a year over a three-year period. Annual RSUs granted to non-management directors vest immediately prior to the next Annual Meeting of Shareholders. Pursuant to the applicable RSU agreement, certain RSUs may be subject to the attainment of any applicable performance goals specified by the Board of Directors. If the vesting of the RSUs is conditional upon the attainment of performance goals, any RSUs that do not vest as a result of a determination that the prescribed performance goals failed to be attained will be forfeited immediately upon such determination. RSUs are credited with dividend equivalents, in the form of additional RSUs, when dividends are paid on the Company’s common shares. Such additional RSUs will have the same vesting dates and will vest under the same terms as the RSUs in respect of which such additional RSUs are credited.

To the extent provided for in a RSU agreement, the Company may, in lieu of all or a portion of the common shares which would otherwise be provided to a holder, elect to pay a cash amount equivalent to the market price of the Company’s common shares on the vesting date for each vested RSU. The amount of cash payment will be determined based on the average market price of the Company’s common shares on the vesting date. The Company’s current intent is to settle vested RSUs through the issuance of common shares.

Time-Based RSUs

Each vested time-based RSU represents the right of a holder to receive one of the Company’s common shares. The fair value of each RSU granted is estimated based on the trading price of the Company’s common shares on the date of grant.

The following table summarizes non-vested time-based RSU activity during 2024:


(in millions, except per share amounts)	Time-Based RSUs	Weighted- Average Grant-Date Fair Value Per Share
Non-vested, January 1, 2024	8.0	$	11.61
Granted	5.3	$	8.89
Vested	(4.2)	$	13.05
Forfeited	(1.0)	$	9.37
Non-vested, December 31, 2024	8.1	$	9.34

As of December 31, 2024, the total remaining unrecognized compensation expense related to non-vested time-based RSUs amounted to $34 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.6 years. The total fair value of time-based RSUs vested in 2024, 2023 and 2022 were $55 million, $74 million and $80 million, respectively.

Performance-Based RSUs

Each vested performance-based RSU represents the right of a holder to receive a number of the Company’s common shares up to a specified maximum. Performance-based RSUs vest upon the attainment of certain performance targets and the achievement of certain share price appreciation conditions. If the Company’s performance is below a specified performance level, no common shares will be paid.

The fair value of each Adjusted Operating Cash Flow performance-based RSU and TSR performance-based RSU granted during 2024 and 2023, respectively, was estimated using a Monte Carlo Simulation model, which utilizes multiple input variables to estimate the probability that the performance condition will be achieved. For the ROTC performance-based RSUs granted in 2022, the fair value was estimated based on the trading price of the Company’s common shares on the date of grant. Expense recognized for the performance-based RSUs in each reporting period reflects the Company’s latest estimate of the number of performance-based RSUs that are expected to vest. If the performance-based RSUs do not ultimately vest due to the targets not being met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

There were no performance-based RSUs granted in 2022. The fair values of performance-based RSUs granted during 2024 and 2023 were estimated with the following assumptions:


	2024	2023	2022
Contractual term (years)	3	3	N/A
Expected Company share volatility	64%	76%	N/A
Risk-free interest rate	4%	5%	N/A

The expected company share volatility was determined based on implied volatility in the market traded options of the Company’s common stock. The risk-free interest rate was determined based on the rate at the time of grant for zero-coupon U.S. government bonds with maturity dates equal to the contractual term of the performance-based RSUs.

The following table summarizes non-vested performance-based RSU activity during 2024:


(in millions, except per share amounts)	Performance-based RSUs	Weighted- Average Grant-Date Fair Value Per Share
Non-vested, January 1, 2024	0.7	$	10.57
Granted	1.3	$	9.60
Vested	—	$	—
Forfeited	(0.1)	$	10.25
Non-vested, December 31, 2024	1.9	$	9.87

As of December 31, 2024, the total remaining unrecognized compensation expense related to non-vested performance-based RSUs amounted to $19 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.7 years. A maximum of approximately 3,356,000 common shares could be issued upon vesting of the performance-based RSUs outstanding as of December 31, 2024.

Bausch + Lomb Long-Term Incentive Plan

Prior to May 5, 2022, Bausch + Lomb participated in Bausch Health’s long-term incentive program. Effective May 5, 2022, Bausch + Lomb established the Omnibus Plan (the “B+L Plan”). Effective April 24, 2023, Bausch + Lomb’s shareholders approved an amendment and restatement of the Plan to increase the number of shares authorized for issuance thereunder by an additional 10,000,000 common shares, resulting in an aggregate 38,000,000 common shares of Bausch + Lomb are authorized under the B+L Plan. At Bausch + Lomb’s annual meeting of shareholders held on May 29, 2024, Bausch + Lomb’s shareholders approved a further amendment and restatement of the B+L Plan to increase the number of shares authorized for issuance thereunder by an additional 14,000,000 common shares, resulting in an aggregate

52,000,000 common shares of Bausch + Lomb authorized for issuance under the B+L Plan. The B+L Plan provides for the grant of various types of awards, including RSUs, restricted stock, stock appreciation rights, stock options, performance-based awards and cash awards. Under the B+L Plan, the exercise price of awards, if any, is set on the grant date and may not be less than the fair market value per share on that date. Generally, stock options have a term of ten years and a three-year vesting period, subject to limited exceptions.

Share-based awards granted to senior management align with Bausch + Lomb’s focus on enhancing its revenue growth while maintaining focus on total shareholder return over the long-term. The share-based awards granted under this long-term incentive program consist of time-based stock options, time-based RSUs and performance-based RSUs (“PSUs”). The stock options and RSUs also include awards granted in connection with the B+L IPO (the “IPO Founder Grants”), for which the time-based vesting conditions were linked to the completion of the Separation. The PSUs are comprised of awards that vest upon: (i) achievement of certain share price appreciation conditions, including absolute and relative total shareholder return (“TSR”) (the “TSR PSUs”), (ii) attainment of certain performance targets that are based on Bausch + Lomb’s Organic Revenue Growth (the “Organic Revenue Growth PSUs”) and (iii) outperformance of performance goals, based on the level of achievement of: (a) a revenue metric (measured for fiscal year 2026) and (b) relative TSR metric (if applicable) (“OPG PSU”). If Bausch + Lomb’s performance is below a specified performance level, no common shares will be paid. Each vested PSU represents the right of a holder to receive a number of Bausch + Lomb’s common shares up to a specified maximum.

The Talent and Compensation Committee of the B+L Board of Directors approved a PSU award for a limited number of key B+L senior leaders (the “B+L Executives”), effective as of February 28, 2024, including each of B+L’s current named executive officers. This OPG PSU award is designed to reward the B+L Executives for achieving significant outperformance of performance goals that Bausch + Lomb believes would ultimately deliver substantial value to shareholders if achieved.

The OPG PSUs may be earned between 0% and 300% based on the level of achievement of: (i) a revenue metric (measured for fiscal year 2026) and (ii) a relative TSR metric for B+L (if applicable). Any OPG PSUs that are earned will vest on February 28, 2027, subject generally to the B+L Executive’s continued employment through such date, except in limited circumstances set forth in the applicable award agreement.

During July 2024, the Talent and Compensation Committee of the B+L Board of Directors approved certain amendments to: (i) the TSR performance metric of certain PSU awards, including the previously granted OPG PSU and (ii) the time-based vesting conditions of the IPO Founder Grants. The Company began accounting for these modifications during the quarter ended September 30, 2024. These modifications did not have a material impact on the Consolidated Financial Statements during the year 2024.

Approximately 20,700,000 Bausch + Lomb common shares were available for future grants as of December 31, 2024 under the B+L Plan. Bausch + Lomb uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

Stock Options

Stock options granted under the B+L Plan generally expire on the tenth anniversary of the grant date. The exercise price of any stock option granted under the B+L Plan will not be less than the closing price per common share on the date of grant. Stock options generally vest 33% each year over a three-year period, on the anniversary of the date of grant.

The fair values of all stock options granted under the Bausch + Lomb Plan for the years 2024 and 2023 were estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	2024		2023
Expected stock option life (years)	3.0		3.0
Expected volatility	35.1	%	35.3	%
Risk-free interest rate	4.5	%	4.6	%
Expected dividend yield	—	%	—	%

The expected stock option life was determined based on historical exercise and forfeiture patterns associated with historical stock options granted to Bausch + Lomb employees under the Company’s long-term incentive plan. The expected volatility was determined based on implied and historical volatility of Bausch + Lomb’s selected peer companies. Bausch + Lomb will continue to leverage the Company’s historical stock option experience and peer company data until it has sufficient experience with its own equity awards and market data. The risk-free interest rate was determined based on the rate at the

time of grant for zero-coupon U.S. government bonds with maturity dates equal to the expected life of the stock option. The expected dividend yield was determined based on the stock option’s exercise price and expected Bausch + Lomb annual dividend rate at the time of grant.

The Black-Scholes option-pricing model used by the Company to calculate stock option values was developed to estimate the fair value of freely tradable, fully transferable stock options without vesting restrictions, which significantly differ from Bausch + Lomb’s stock option awards. This model also requires highly subjective assumptions, including future stock price volatility and expected time until exercise, which greatly affect the calculated values.

The following table summarizes stock option activity under Bausch + Lomb’s Plan during 2024:


(in millions, except per share amounts)	Options	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding, January 1, 2024	8.0	$	18.07
Granted	1.3	$	16.96
Exercised	—	$	17.96
Expired or forfeited	(0.3)	$	17.99
Outstanding, December 31, 2024	9.0	$	17.90	6.9	$	2.3
Vested and expected to vest, December 31, 2024	8.4	$	17.90	6.3	$	2.1
Vested and exercisable, December 31, 2024	1.1	$	18.15	7.3	$	0.1

The weighted-average fair values of stock options granted to Bausch + Lomb employees in 2024 and 2023 were $4.94 and $5.33, respectively. The stock options exercised in 2024 were not material. There were no stock options exercised in 2023.

As of December 31, 2024, the total remaining unrecognized compensation expense related to non-vested stock options amounted to $17 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.5 years.

Time-Based RSUs

RSUs under the Bausch + Lomb Corporation Plan generally vest 33% a year over a three-year period with the exception of the RSUs granted pursuant to the IPO Founder Grants and the RSUs granted to B+L’s Chief Executive Officer in connection with his appointment, which vest in two equal installments, such that 50% vest on the second anniversary and 50% vest on the third anniversary of the grant date. RSUs are credited with dividend equivalents, in the form of additional RSUs, when dividends are paid on Bausch + Lomb’s common shares. Such additional RSUs will have the same vesting dates and will vest under the same terms as the RSUs in respect of which such additional RSUs are credited.

To the extent provided for in a RSU agreement, Bausch + Lomb may, in lieu of all or a portion of the common shares which would otherwise be provided to a holder, elect to pay a cash amount equivalent to the market price of Bausch + Lomb’s common shares on the vesting date for each vested RSU. The amount of cash payment will be determined based on the average market price of Bausch + Lomb’s common shares on the vesting date. Bausch + Lomb’s current intent is to settle vested RSUs through the issuance of common shares.

Each vested RSU represents the right of a holder to receive one of Bausch + Lomb’s common shares. The fair value of each RSU granted is estimated based on the trading price of Bausch + Lomb’s common shares on the date of grant.

The following table summarizes non-vested RSU activity under Bausch + Lomb’s Plan during 2024:


(in millions, except per share amounts)	RSUs	Weighted-Average Grant-Date Fair Value Per Share
Non-vested, January 1, 2024	5.3	$	17.25
Granted	3.7	$	16.80
Vested	(2.4)	$	17.50
Forfeited	(0.4)	$	17.21
Non-vested, December 31, 2024	6.2	$	16.89

As of December 31, 2024, the total remaining unrecognized compensation expense related to non-vested RSUs amounted to $60 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.5 years. The total fair value of RSUs vested in 2024 and 2023 was $41 million and $27 million, respectively.

Performance-Based RSUs

Each vested PSU represents the right of a holder to receive a number of Bausch + Lomb’s common shares up to a specified maximum. The performance-based PSUs are comprised of awards that vest upon: (i) achievement of certain share price appreciation conditions, including absolute and relative total shareholder return, (ii) attainment of certain performance targets that are based on Bausch + Lomb’s Organic Revenue Growth and (iii) level of achievement of: (a) a revenue metric (measured for fiscal year 2026) and (b) a relative TSR metric (if applicable). If Bausch + Lomb’s performance is below a specified performance level, no common shares will be paid. The maximum level of achievement of the performance goals is 200% - 300% of the target.

The fair value of the TSR PSUs granted during 2024 and 2023 and the OPG PSUs granted during 2024 were estimated using a Monte Carlo Simulation model, which utilizes multiple input variables to estimate the probability that the performance condition will be achieved. The fair value of the Organic Revenue Growth PSUs is estimated based on the trading price of Bausch + Lomb’s common shares on the date of grant. Expense recognized for the Organic Revenue Growth PSUs in each reporting period reflects Bausch + Lomb’s latest estimate of Organic Revenue Growth in determining the number of PSUs that are expected to vest. Expense recognized for the OPG PSUs in each reporting period reflects the latest probability of Bausch + Lomb’s achieving certain revenue targets in determining the number of PSUs that are expected to vest. If the Organic Revenue Growth PSUs do not ultimately vest due to the Organic Revenue Growth not being met and/or the OPG PSUs do not ultimately vest due to certain revenue targets not being met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

There were no TSR PSUs granted in 2022. The fair values of TSR PSUs granted during 2024 and 2023 were estimated with the following assumptions:


	2024	2023
Contractual term (years)	3.0	3.6
Expected volatility	35.1%	35.4%
Risk-free interest rate	4.5%	4.5%

The expected volatility was determined based on implied and historical volatility of Bausch + Lomb’s selected peer companies. The risk-free interest rate was determined based on the rate at the time of grant for zero-coupon U.S. government bonds with maturity dates equal to the contractual term of the TSR PSU.

The following table summarizes the performance-based PSU activity during 2024:


(in millions, except per share amounts)	Performance-based RSUs	Weighted-Average Grant-Date Fair Value Per Share
Non-vested, January 1, 2024	1.2	$	26.82
Granted	3.0	$	18.15
Vested	—	$	—
Forfeited	(0.1)	$	18.14
Non-vested, December 31, 2024	4.1	$	20.61

During 2024, Bausch + Lomb granted approximately 3,000,000 performance-based RSUs, consisting of: (i) approximately 1,800,000 OPG PSUs with a weighted-average grant date fair value of $17.20 per RSU, (ii) approximately 800,000 TSR PSUs with an average grant date fair value of $21.21 per RSU and (iii) approximately 400,000 Organic Revenue Growth PSUs with a weighted-average grant date fair value of $16.09 per RSU.

As of December 31, 2024, the total remaining unrecognized compensation expense related to non-vested performance-based RSUs under the Company’s 2014 Plan amounted to $60 million, which will be amortized over the weighted-average remaining requisite service period of approximately 2.1 years. A maximum of approximately 10,800,000 common shares could be issued upon vesting of the performance-based RSUs outstanding as of December 31, 2024. There were no performance-based RSUs that vested during 2024 and 2023.

In addition, while Bausch + Lomb did not grant performance-based RSUs during 2022, certain Bausch + Lomb employees continued to participate in the Company’s performance-based RSUs granted prior to May 5, 2022. As of December 31, 2024, there is no remaining unrecognized compensation expense related to the Company’s non-vested performance-based RSUs.